Virtual Banking Banned in Second Life

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Linden Lab has announced that virtual banking within Second Life is to be banned effective January 22 after receiving multiple complaints by Second Life residents scammed by bank operators.

Banking and associated services have become popular in Second Life over the last two years, with many offering ponzi style interest schemes that usually sounded too good to be true. Ginko Financial was the best known failure amongst Second Life banks, owing 200 million Linden ($750,000) to depositors when it declared itself insolvent in August 2007.

In a post on the Second Life blog, Ken Linden said that as well as not being able to provide protection to Second Life users with these banks running, their legality under law is also questionable. The decision is unlikely to affect virtual stock exchanges but may affect groups such as Second Life credit card provider Metacard, who also previously offered bank services as well.

Second Life banks are experiencing a run on their funds as customers seek to get their money before the ban comes in place. Companies such as JT Financial have been inundated by customers wanting to know what is going on. Screen shot of the JT Financial crisis meeting below.